I am the founder and CEO of CircleUp, an accredited investor crowdfunding platform focused on consumer and retail companies. Before I started CircleUp, I worked in consumer-focused private equity at TSG Consumer Partners and Encore Consumer Capital. My experience in private equity exposed me to many great consumer and retail businesses that were too small to obtain funding through the traditional private equity channels. I created CircleUp to open up these investment opportunities to more investors, helping the best of these businesses gain access to capital while lowering the cost of investment for individual and small institutional investors. I received my MBA from Stanford and BA from Duke. I also hold Series 24, 63, and 82 licenses. You can connect with me through http://www.facebook.com/CircleUp.

A Reason for Optimism in Small Business Investing

This is a guest post from Rory Eakin, COO and co-founder of CircleUp. Rory was invited to testify before Congress and is writing about his experience this week. Disclosure: Rory is my business partner.

I was still arranging my papers as my cab pulled up to the Rayburn office building on Independence Avenue. Turns out, when you are asked to testify before Congress, you are responsible for bringing copies of your statement for each Member. As I stepped out into the still warm, late summer morning in DC, I had seventy copies of my argument, a case for implementation of the JOBS Act, the bipartisan bill signed into law in April but not yet in force in some of the major provisions, under my arm.

It was a great honor to be invited to testify before Congress. The purpose of the testimony was to share my experiences, both as the founder of a small business, equity-based crowdfunding site CircleUp, and as an expert on the impact of the JOBS Act.

As a small business owner and investor, it is easy to be cynical about what is happening in DC. Talking heads banter about gridlock and lack of initiative to help revive the economy. But, the JOBS Act is testament to the impact politicians can have to improve conditions for job creation. I choose to testify to support this important bill, and also urge its implementation, which still awaits final approval from the SEC. I also advocated for specific rules to help protect both investors and companies as the rulemaking continues.

For the millions of individual investors and small businesses across the country, the most important part of the JOBS Act will be the lifting of the ban on general solicitation, or advertising. Currently, private businesses are prohibited from advertising a capital raise (called general solicitation). In practice, this restriction means that high-growth start-ups spend months fundraising through a complex, inefficient process in which they are prohibited from informing their most passionate supporters, but instead can only introduce the business to qualified ‘angel’ investors.

The JOBS Act will change this, allowing for the free flow of information between small businesses and potential investors. Investors will gain access to deal flow they may not otherwise ever find, let alone gain access to, with less time spent networking to private companies. Small businesses, particularly those outside of the technology sector, will be able to leverage their networks of customers, distributors and suppliers to connect with the best capital for their particular needs. Now a baby food company can raise money from 50 parents that love the brand and want to talk about it to their friends.

Equally important for the economy overall, the JOBS Act will open up investment markets for local companies outside of the established VC hubs around Silicon Valley, Cambridge, and New York. As advocates for the bill such as Startup America Chairman Steve Case have articulated, this is about spurring entrepreneurship and unlocking small business growth opportunities, and job creation, in every corner ofAmerica. It is about increasing the amount of information, and choice, for investors everywhere.

The lift in the ban on general solicitation does not change the risk, or reward, of this asset class. It simply gives investors the option to make a choice about where they want to invest. Beyond the broad generalizations frequently tossed around, this bill is about individual people – both investors and small business owners – being able to come together in mutually agreed upon terms more efficiently.

Fortunately, during the hearing, this very personal side of the bill came out through the testimony of Alison Bailey Vercruysse, the Founder and CEO of 18 Rabbits (disclosure: 18 Rabbits partnered with my company, CircleUp, to help raise their last round of capital). Even with differing views on the timing and rule-making for the implementation of the bill, Members from both parties celebrated Alison as she told the story of scaling her small enterprise from making granola in her kitchen to a $2M company with national distribution. Politicians from across the aisle can agree, the country is better off when great companies like 18 Rabbits get funding more efficiently, while regulatory systems ensure credible marketplaces are maintained to protect investors and entrepreneurs.

Sitting next to Alison, as she proudly held up her product to a dozen Members of Congress and explained how all she wanted was an opportunity to use modern information communication tools (Facebook, LinkedIn, etc…) to inform her customers and business contacts that she is raising capital, I couldn’t help but think that this more personal view of the challenges entrepreneurs face across the country is what is needed for more reform to happen.

The lift in the ban on general solicitation does not change the risk, or reward, of private investing. It does not change who can invest in these businesses (still accredited investors only). It simply gives investors the option to make a choice about where they want to invest. With unemployment over 8%, small businesses struggling to raise capital, and investors hungry for diversification following years of disappointing performance in public markets, this is an issue of national importance. I was proud of the opportunity to stand up for this bill, and look forward to full implementation in the days to come.

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